Gasoline and diesel at year's highs

Context

In brief

• Regular gasoline reaches 2.10 CHF, diesel 2.26 CHF according to TCS
• Prices close to the peak of August 20, +20-26% since February 2024
• Cause: Middle East conflict and water scarcity on the Rhine

Key facts

• What: Fuel prices rise to annual highs
• When: Today according to TCS, previous peak on August 20, 2024
• Where: Switzerland (fuel stations)
• Who: Touring Club Switzerland (TCS)
• Regular gasoline: 2.10 CHF/liter
• Diesel: 2.26 CHF/liter
• Increase: +20-26% since late February 2024

The cost of fuel at the pump is rising again and is now almost at the annual high. According to the Touring Club Switzerland (TCS), the conflict in the Middle East and logistical difficulties on the Rhine are putting pressure on international fuel supplies to the Confederation. Today's data shows that the situation has returned to critical levels for those managing a car travel budget.

Regular unleaded gasoline averages 2.10 francs per liter, while the 98 version reaches 2.12 francs. Diesel, on the other hand, rises to 2.26 francs. The values are just one cent below the peaks reached on August 20, when prices hit the annual high up to that point. Since the start of the war in Iran, which broke out at the end of February, fuel prices have risen between 20 and 26 percent. A significant increase that reflects the volatility of international markets and the direct impact of geopolitics on consumer prices in Switzerland.

How fuel prices are determined in Switzerland

This new surge is mainly explained by the international context. According to TCS experts, the pump price in Switzerland is traditionally linked to three main variables: the trend of crude oil prices on the Rotterdam exchange, the exchange rate of the US dollar against the Swiss franc, and the costs of river transport on the Rhine. The latter factor adds an additional critical element particularly relevant today.

The exceptional water scarcity affecting the major European river this period has drastically reduced the cargo capacity of barges, essential elements for transporting fuels inland. This reduction in logistics capacity has caused transport tariffs for fuel imports to the Confederation to soar, further worsening the final cost picture. For Swiss fuel importers and station managers, this means direct additional costs that inevitably pass on to end consumers.

Operational details

Structural damage to global refining capacity

This is compounded by a deeper structural damage that goes beyond mere logistical factors: global refining capacity has been severely compromised by both the conflict in Ukraine and that in Iran. These two parallel conflicts have drastically reduced the supply of finished products on the global market, creating a bottleneck that affects all importing countries, including Switzerland.

When global refining capacity decreases, the supply of finished fuels becomes scarcer compared to demand. This basic imbalance automatically translates into higher prices for those importing these products. Switzerland, completely dependent on fuel imports and without its own refineries, is particularly affected by this phenomenon. The Rhine, already under pressure due to water scarcity, represents an additional bottleneck in the European logistics chain that further amplifies the impact on final costs.

Comparison with the 2022 peaks: the historical context

A note of relief for Swiss drivers: current prices remain lower than the staggering levels reached after the Russian invasion of Ukraine in February 2022. At that time, the price of a liter of 95-octane gasoline exceeded the threshold of 2.30 francs, a value considerably higher than the current 2.10 francs. The difference of 20 centimes may seem modest, but on an annual basis, it represents a significant saving for those who regularly use the car.

However, the upward trend remains evident and concerning for those managing mobility budgets. TCS experts warn that the situation remains fluid and vulnerable. With geopolitical tensions in the Middle East far from resolved and logistical difficulties on the Rhine set to continue at least until the river's water conditions improve, the risk of further price increases in the coming weeks remains concrete and significant.

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Key points

Monitoring fuel prices and planning your budget

For those who commute daily by car in Switzerland, these price increases have a direct and measurable impact on their monthly budget. An increase of just over 20 cents per liter for diesel and gasoline is not trivial when multiplied by the average annual consumption of a vehicle. Considering a car with an average consumption of 6.5 liters per 100 kilometers and an annual mileage of 15,000 kilometers, approximately 975 liters are consumed each year.

With current prices, the annual fuel cost for this vehicle amounts to around 2,100 francs, based on an average of 2.16 francs per liter for both gasoline and diesel. If this same car had remained at the prices of late February (before the recent price hikes), the annual cost would have been about 23% lower, approximately 1,650 francs. The difference translates to an additional annual expense of about 450 francs for fuel alone due to the recent price increase. For those who work or have regular trips to Switzerland, this is a figure that directly affects their net budget profitability.

Practical strategies and monitoring

While it is not possible to directly influence international prices and geopolitical conflicts, there are practical strategies to mitigate the impact. Firstly, comparing prices between different fuel stations in your area can make a concrete difference: variations between different pumps can easily reach several cents per liter, which means dozens of francs saved annually. Secondly, optimizing routes and driving times to reduce overall consumption remains effective.

For those who need detailed budget planning related to mobility, tools like the calculator allow you to simulate and understand how changes in travel costs affect your overall financial situation. Similarly, consulting the cost-of-living tool helps to contextualize the impact of fuel within the overall cost of living in Switzerland and allows for more informed planning of your monthly and annual budget.

Source: swissinfo.ch